RBS moves closer to still-distant goalposts 30 Jul 2015 The state-controlled UK bank is building capital, shrinking assets and expunging historical nasties. The second quarter’s 11 percent operating profit growth reassures. Yet non-state investors’ greatest desires – dividends and an end to government meddling – are not yet in sight.
Buyout firms are sitting on dry powder keg 29 Jul 2015 Carlyle and Apollo found more to sell than buy in the second quarter, a pattern becoming hard to break. Along with Blackstone, KKR and others, global LBO shops have almost $500 bln to invest. As corporate buyers keep winning deals, private equity’s fuse may get short.
Austria pricked by court in Heta bail-in tangle 28 Jul 2015 A law which wiped out guaranteed creditors of bust bank Heta has been thrown out. The sums are small, but the court’s decision may embolden creditors in a bigger fight, over 10 bln euros of other state-backed debt. The verdict hurts Austria, but the legal logic is hard to fault.
Zurich should look hard before it leaps at RSA 28 Jul 2015 The Swiss insurer wants to invest free capital rather than give it back to shareholders. UK-based RSA, at 5 bln stg, is an attainable target. But Zurich Insurance might first examine the disastrous 1996 deal that created the company formerly known as Royal & Sun Alliance.
Wacky $2.2 bln SNL deal puts investors in a tizzy 27 Jul 2015 Shares in McGraw Hill lost $1.6 bln of value after it agreed to buy the financial data firm for 53 times last year’s EBITDA. That suggests investors value the growing SNL at little more than the $550 mln of tax breaks it brings. The multiple is crazy, but that doesn’t compute.
UBS payout potential gives it an edge over peers 27 Jul 2015 The Swiss bank snuck out early, estimate-beating earnings of $1.25 bln in the second quarter. Its two main businesses did well, and capital buffers swelled. That, plus a tax asset revaluation, makes UBS one of the few European banks likely to pay a decent full-year dividend.
China worries start now for Visa and MasterCard 27 Jul 2015 The People’s Republic will open its $7 trln bank card payment market to outsiders. Yet Visa and MasterCard, whose shares have risen since the decision, face an entrenched incumbent and online rivals like Alibaba. The hype from getting market access looks premature.
Review: A partial defence of financial innovation 24 Jul 2015 The crisis has made many suspicious of new ideas in finance. “Smart Money” sets out to plead for the other side. The optimistic tone is refreshing, and the book offers many interesting examples of new business models. However, the case has too many gaps to be truly persuasive.
Green bonds struggle to justify the hype 23 Jul 2015 China’s first eco-friendly bonds push this year’s issuance close to $20 bln. The market has grown fast. But definitions are fuzzy, returns are humdrum, and it’s not clear what problem this solves for corporate issuers, most of whom could sell conventional debt at similar rates.
Bond trading bright spot hints at dim bank future 22 Jul 2015 MarketAxess keeps growing even as new rules and volatility have whacked Wall Street profit in fixed income, currency and commodities. But the tech-driven firm’s second-quarter results show its revenue isn’t keeping pace with rising volume. That’s a worry for larger rivals.
Barclays faces awkward Qatari settlement dilemma 22 Jul 2015 The UK bank may have the option of taking a so-called deferred prosecution agreement for alleged inadequate disclosure of fees paid to the emirate after a 2008 capital hike. A speedy resolution would remove a key risk for investors. But it might also open a legal can of worms.
John Thain leads way for U.S. regional bank M&A 21 Jul 2015 The CIT boss – and last CEO of Merrill Lynch – secured regulatory approval to buy OneWest. It’s the first deal to create a systemically important financial institution. It should clear the way for more mergers for banks fearful of regulators but in need of profit boosters.
Dodd-Frank plays Whac-A-Mole with financial risk 20 Jul 2015 This seminal piece of legislation, now five years old, has forced banks to increase capital and improve oversight. Parts of the once-murky derivatives market are more transparent, too. Overall, the system looks much safer. But the law may have created new risks.
Morgan Stanley makes modern run at Goldman 20 Jul 2015 The bank led by James Gorman raked in decent revenue yet fell just shy of its 10 pct return on equity target. Trimming expenses would get it there, and could even catch Goldman at 11.7 pct. Although the two have trod different paths down Wall Street, the rivalry may never die.
Shouldn’t Credit Suisse and StanChart swap CEOs? 20 Jul 2015 Bill Winters is beginning his tenure as new boss of the emerging markets lender at the same time that Tidjane Thiam takes charge of the Swiss investment and private bank. Both are capable executives, but their experiences seem uncannily to better suit the other’s job.
ECB faces tricky call on Greek bank solvency 20 Jul 2015 With Athens’ lenders open again, attention now shifts to Frankfurt’s supervisory test of their capital strength. Half of their buffer is deferred tax credits, which supervisors hold in low regard. But taking a tough approach makes a painful bail-in of depositors more likely.
UK seeks watchdog: must be tactful, tough and able 17 Jul 2015 Britain is searching for a new regulator after Chancellor George Osborne ousted Financial Conduct Authority boss Martin Wheatley. His replacement will need to avoid mistakes and forge a conciliatory pact with financial institutions while also protecting consumers. It’s a big ask.
Review: A virtuous defence of finance 17 Jul 2015 Markets are more ethical than confrontational, writes Pierre de Lauzun. The French banker even praises his industry for tying present to future and supporting the common good. He’s onto something. Finance can be socially helpful, if it shakes off so-called economic rationality.
Bafin barbs show scale of Deutsche overhaul task 17 Jul 2015 A leaked letter from the German bank’s lead regulator slams executives for incompetence - or worse - over Libor. New CEO John Cryan needs to repair relations. Improving controls and recruiting new managers complicate the already-sizeable job of boosting Deutsche’s performance.
Rob Cox: The world’s hardest central bank job 16 Jul 2015 It’s not Yellen’s, Draghi’s or Kuroda’s. Russian central bank chief Elvira Nabiullina faces a unique bouquet of challenges. On top of a weak oil price and ruble, nettlesome inflation and Western sanctions, there’s Vladimir Putin. Under the circumstances, she deserves a medal.